US Senators Target Wildfire Bets in New CFTC Rule Fight

Nine Democratic U.S. senators have urged the Commodity Futures Trading Commission to ban prediction contracts tied to wildfires, warning that such bets could incentivize arson and exploit disaster victims. In an Aug. 3 letter led by Sen. Jeff Merkley (D-OR), the lawmakers requested a response from CFTC Chairman Michael Selig by Aug. 14.

The letter cites over $1.2 million in trading on Polymarket related to California’s January 2025 Palisades and Eaton fires. Contracts covered containment dates, acreage burned, and whether the fire would reach Beverly Hills, with one market alone recording $711,587 in volume. The senators argue that offering bets on destructive wildfires “threatens to minimize communities’ suffering all so the rich and powerful can profit” and raises a risk of arson, according to state and local fire officials.

No confirmed case of arson linked to prediction-market trading has been reported, and the letter does not accuse any trader of starting fires. However, it draws parallels to a federal case where an Army sergeant used inside information to profit on Polymarket.

Polymarket rejected the senators’ framing. “When tragedy unfolds, people turn to the news for commentary and to Polymarket for information,” the company said. “Removing them does not prevent a tragedy. It only makes timely, market-based information less accessible.”

The Commodity Exchange Act allows the CFTC to prohibit event contracts involving terrorism, assassination, war, gaming, unlawful activity, or other similar activities contrary to the public interest. Wildfires are not explicitly listed. The senators’ request is partly preemptive, as the identified contracts appear to be offered only on Polymarket’s international platform, which operates separately from its CFTC-regulated U.S. entity. The lawmakers warned that “it is only a matter of time before other U.S. based Designated Contract Markets try to offer these.”

The CFTC has not publicly responded. Merkley previously led an April letter asking the CFTC to ban election, war, and sports contracts without hedging utility, but the commission instead proposed a case-by-case review process in June.

Source: https://news.bitcoin.com/igaming/us-senators-target-wildfire-bets-in-new-cftc-rule-fight/